Flexible Spending Accounts cover medical, dental, and vision expenses you pay out of your own pocket

A Flexible Spending Account (FSA) lets you set aside pre-tax money to pay for healthcare costs that your insurance doesn't cover or that you pay before meeting your deductible. The IRS maintains a specific list of what counts as a may have access to medical expense, and only those items can be purchased with FSA funds. If you buy something not on that list, you'll pay tax on it plus a 20 percent penalty.

The most common covered expenses are copayments, coinsurance, deductibles, and prescription medications. But FSAs also cover many things people don't realize — dental work, vision care, hearing aids, and even some over-the-counter items if you have a prescription for them. What's not covered is just as important: health insurance premiums, cosmetic procedures, and most over-the-counter drugs without a prescription.

Key Takeaways

  • FSA funds pay for copayments, coinsurance, deductibles, and prescription medications that your health insurance requires you to pay.
  • Dental and vision care — including cleanings, fillings, glasses, and contact lenses — are covered expenses.
  • Many over-the-counter items like pain relievers, allergy medicine, and bandages are covered only if a doctor writes a prescription for them.
  • Health insurance premiums, cosmetic procedures, and gym memberships are not covered, even if they relate to your health.
  • You must use FSA money within the plan year or lose it; most plans do not roll over unused funds to the next year.

Medical expenses your FSA will pay for

Your FSA covers any amount you owe to a doctor, hospital, or clinic after your insurance pays its share. This includes copayments at the doctor's office, coinsurance (the percentage you pay after insurance), and amounts you pay toward your annual deductible. If you need surgery, physical therapy, mental health counseling, or urgent care, FSA funds can cover your out-of-pocket costs for those services.

Prescription medications are covered in full — the entire cost, not just your copayment. If your insurance requires you to pay $30 for a prescription, you can use FSA funds for that $30. If you pay the full price because you're using a discount card instead of insurance, that full amount is also covered.

Certain medical equipment and supplies are covered too: blood glucose monitors and test strips, blood pressure monitors, thermometers, crutches, wheelchairs, and oxygen equipment. Hearing aids and batteries for hearing aids are covered. Orthopedic shoes and shoe inserts prescribed by a doctor are covered. The key is that the item must be primarily medical in nature and not something you'd use even if you weren't sick.

Dental and vision care covered by FSA funds

Dental work is fully covered: cleanings, fillings, root canals, crowns, extractions, and orthodontia. You can use FSA funds for the full cost of braces or Invisalign if a dentist recommends it. Dental X-rays and exams are covered. Teeth whitening is not covered because it's considered cosmetic, but if your dentist prescribes whitening for medical reasons (such as discoloration from medication), it may be covered — ask your plan administrator.

Vision care includes eye exams, glasses, contact lenses, and contact lens solution. Laser eye surgery (LASIK) is covered. Sunglasses are not covered, even if you need them for light sensitivity, because they have a non-medical use. If you need special prescription sunglasses for a medical condition, check with your plan first.

Over-the-counter items: when they're covered and when they're not

Over-the-counter medications and supplies are covered only if a doctor writes a prescription for them. This changed in 2020 under federal tax law. Before that, you could buy pain relievers, cold medicine, allergy tablets, and antacids with FSA funds without a prescription. Now you cannot — unless you have a written prescription from a doctor.

A prescription doesn't have to be for a pharmacy to fill. Your doctor can write a prescription for over-the-counter pain relievers, allergy medicine, or heartburn medication, and you can then buy those items at any store and pay with FSA funds. Some doctors will do this; others won't. It's worth asking if you use these items regularly.

Medical supplies that are over-the-counter — bandages, gauze, elastic wraps, heating pads, ice packs, and first aid kits — are covered without a prescription. The distinction is between drugs (which need a prescription) and supplies (which don't).

What is not covered by FSA funds

Health insurance premiums cannot be paid with FSA funds, whether they're for your employer plan, a spouse's plan, or an individual policy. Long-term care insurance premiums are also not covered. However, if you're on COBRA continuation coverage, you can use FSA funds to pay the medical expenses COBRA covers — just not the premium itself.

Cosmetic procedures are not covered: teeth whitening for appearance, Botox, hair removal, or plastic surgery. Gym memberships and fitness classes are not covered, even if your doctor recommends exercise. Vitamins and supplements are not covered unless a doctor prescribes them for a specific medical condition (and even then, some plans won't cover them). Weight loss programs and diet foods are not covered.

Expenses for a family member who is not on your tax return cannot be paid with your FSA funds. If you have a dependent child or parent, they must be claimed as a dependent on your tax return for their medical expenses to be FSA-may be able to access. Travel costs to get medical care, lodging while receiving treatment, and meals are generally not covered, though there are narrow exceptions for specific situations — ask your plan administrator.

How to know if something is covered before you buy it

Your FSA plan document lists covered expenses, but the IRS also publishes a detailed guide called Publication 502 that defines may have access to medical expenses. Your plan administrator — usually someone in your employer's benefits department — can answer specific questions about whether a particular item or service is covered under your plan.

If you're unsure, ask before you spend the money. Some FSA debit cards will decline a purchase if it's not coded as a medical expense, but not all do. If you buy something that turns out to be ineligible, you'll have to pay tax on that amount plus a 20 percent penalty when you file your taxes. Keeping receipts and the prescription (if one was required) protects you if the IRS ever audits your FSA use.

Frequently Asked Questions

Can I use my FSA to pay for my spouse's medical expenses?

Yes, if your spouse is claimed as a dependent on your tax return. You cannot use FSA funds for a spouse's expenses if they file taxes separately or are not your dependent. The same rule applies to children and other family members.

Are prescription glasses and contacts covered?

Yes. Glasses, contact lenses, contact lens solution, and eye exams are all covered. Sunglasses are not covered unless prescribed for a specific medical condition like severe light sensitivity.

What happens if I buy something with my FSA that turns out to be ineligible?

You'll owe income tax on that amount plus a 20 percent penalty. Keep your receipts and any prescriptions so you can document what you bought. If you're audited, you'll need proof that the expense was medical in nature.

Can I use FSA funds for mental health counseling or therapy?

Yes. Copayments, coinsurance, and deductibles for mental health services are covered. If you pay out of pocket for therapy or counseling, those costs are also covered as long as the provider is licensed and the treatment is for a diagnosed condition.

Are over-the-counter pain relievers covered without a prescription?

No, not since 2020. You need a written prescription from a doctor to use FSA funds for over-the-counter medications. Medical supplies like bandages and wraps are covered without a prescription.